The Information That Follows Was Obtained from the Accounting Records $\begin{array}{lr}\text { Sales } & \$ 8,800,000 \\\text { Variable costs } & 2,400,000 \\\text { Fixed costs } & 6,016,000\end{array}$

question 42

Essay

The information that follows was obtained from the accounting records of Gladstone Manufacturing during a period when the company sold 100,000 units. $\begin{array}{lr}\text { Sales } & \$ 8,800,000 \\\text { Variable costs } & 2,400,000 \\\text { Fixed costs } & 6,016,000\end{array}$
Required:
A. Compute the company's per-unit contribution margin and break-even point in units.
B. How many units must Gladstone sell to produce a target profit of $550,400?
C. Assume that Gladstone was able to reduce the variable cost per unit by $4. What selling price could management charge if it desired to maintain the current break-even point?
D. Depreciation charges of $640,000 are included in the firm's fixed costs of $6,016,000. If these charges were to increase by 10%, what effect, if any, would this cost increase have on the company's contribution margin?

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Definitions:

Preexisting Condition

A medical condition that existed before an individual's health insurance coverage began.

Expenditure Caps

Limits set on the amount of money that can be spent on a particular activity or over a set period.

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Laws and regulations designed to safeguard patients' rights and ensure the safety and quality of healthcare.

Preferred Provider Organization

A type of health insurance plan that offers a network of healthcare providers for more cost-effective medical care.